KARACHI: The local market remained stable on Thursday. Market Sources told that trading volume remained thin.
Market sources told that rate of Phutti reached at the highest level in the history of Pakistan. Sources also said that it is in the first time of history that new cotton season starts in the month of May. The rate of Phutti reached at Rs 6200 per 40 kg which is at highest level in the history.
Meanwhile, initial surveys of the cotton sowing area by the provincial departments concerned suggest that area under sowing of cotton during current season remained slightly over 3.3 million acres of land which is almost 700,000 acres short of the target of 4 million acres assigned to the province.
The area under cotton cultivation last year was 3.821 million acres and it is decreasing continuously for the last three years. This year, it is estimated that area under cotton sowing will remain 3.31 million acres, showing a decline of 13.4 percent as compared to last years. However, the shortfall is more if it is calculated against the assigned target.
Sources in the Crop Reporting Services, Punjab, told the Business Recorder that by May 31, 2021, (cotton sowing season end date), area under cultivation was recorded at 3.115 million acres, which comes to 94.1 percent of the expected cultivated area.
However, they said that ‘Girdawari’ to ascertain the actual area under cotton sowing will be launched soon and final figures, hopefully, will be tabulated by the end of second week of June.
Break-up of the initial survey shows that cotton was sown 4 percent less in Sargodha Division as compared to last year, 23 percent less in Faisalabad, 16 percent less in Sahiwal, 19 percent less in Multan, 27 percent less in D G Khan and 3 percent less in Bahawalpur Division against last year.
Director General Agriculture (Extension) Dr Anjum Ali while talking to this scribe said they were still in the review phase of cotton sowing area. However, he said that initial figures suggest that it was sown over 3 million acres of land but the final figures would come by the middle of the current month. He also said that they were hoping 3.3 million acres of sowing was expected.
Asked about decline, he said that cotton has now a very stiff competition with the ‘maize’ crop which has more production per acre and bring more profit for the growers.
Dr Zafar Hayyat, Farmers Bureau Pakistan President and a Progressive Grower from Multan Division, claimed that cotton has sown over 25-30 percent less area in Shujaabad and Jalalpur Peer Wala, two major cotton growing areas this year. He claimed that big farmers having over 100 acres of land has reduced their area by 50 percent during the current season.
He said unavailability of ‘Germplasm’ having resistance against current weather and other hardships, poor germination rate of available seeds and lower plant vigour were the main reasons behind decline in cotton sowing. He said that available pesticides also do not have effective performance against white fly, thrips or Jassid, most harmful pests of the cotton crop. Farooq Ahmad Bajwa, a cotton grower from Bahawalnagar claimed that area under cotton cultivation would remain around 2.5 million acres and production will remain 4 million bales.
Cotton Analyst Naseem Usman told Business Recorder that if the cotton sowing area is decreased in Punjab then it is difficult that cotton production target of one crore bales set by Federal Agriculture Committee will be achieved.
The new season of cotton 2021 -22 has started and up till now 800 bales were prepared.
He also told that new season of cotton has started in the country from June 1. 400 bales of cotton has been delivered from the ginning factory of Tandoo Adam and 100 bales of cotton were prepared in the ginning factory of Sanghar. A ginning factory of Burewala has delivered 200 bales of cotton from the Phutti of Sindh. Up till now 800 bales of cotton were prepared from the Phutti of new season of 2021-22.
Naseem told that Federal Agriculture Committee has set the target of production of one core five lac bales will be produced in the country. An office bearer of Ministry of National Food Security and vice chairman Pakistan Central Cotton Committee Dr Muhammad Ali Talpur told Chairman Karachi Cotton Brokers Forum Naseem Usman told that cotton will be cultivated on forty lac acres in Punjab while in Sindh it will be cultivated on seventeen lac acers. Cotton will be cultivated in Balochistan and Khyber Pakhtoon Kha on three lacs. Up till now sowing will be completed on 65 % to 70 % area.
The rate of Phutti in Sindh is in between Rs 6000 to Rs 6200 per 40 kg. The rate of Banola is in between Rs 2400 to Rs 2500 per maund.
Pakistan Yarn Merchants Association (PYMA) has urged the Federal Minister for Finance and Revenue Shaukat Tarin to eliminate the discrimination between industrial and commercial importers and provide equal opportunities for businesses. It also requested him to impose same taxes on both so that business activities could be restored.
Hanif Lakhany, senior vice chairman of the Pakistan Yarn Merchants Association (PYMA), and Farhan Ashrafi, vice chairman, in an appeal to the minister said that commercial importers of synthetic yarns essentially cater to the needs of the SME sector.
The knitters and weavers in the SME sector don’t have access to bank credits and exclusively rely on commercial importers to meet their needs of raw materials.
The PYMA said, “Commercial importers also facilitate the SME sector by providing credit. Unfortunately, our current taxation policy penalizes the commercial importers of raw materials, which results in higher costs and subsequently the SME sector has to bear the additional cost on account of a discriminatory tax regime.”
The PYMA pointed out that the industrial importers of synthetic yarn are subjected to withholding tax at import stage at 1 percent versus 2 percent for commercial importers.
Furthermore, Industrial importers pay no value addition sales tax at import stage whereas commercial importers are subjected to a 3 percent value addition sales tax.
The extra cost incurred by the commercial importers is passed on to the SMEs rendering them uncompetitive. They further said that the SME sector due to its very nature suffers from many disadvantages because of their small size and lack of access to formal credit. The government must ensure that they get their raw materials at competitive prices.
“Another contentious issue is the further tax in case of sales to unregistered buyer. The conventional wisdom would have us believe that more unregistered buyers will register to avoid paying further tax at 3 percent, and that the tax base will be expanded. The ground realities are very different, and this policy is incentivizing fake invoices causing revenue leakages,” it said.
Moreover, Pakistan Yarn Merchants Association (PYMA) has urged Prime Minister Imran Khan to remove additional customs duty (ACD) and regulatory duty (RD) on basic raw material synthetic yarns for making the textile industry competitive in international markets, and also requested to reduce turnover tax on yarn traders so that trade and industry can be restored to normal and exports can boost, which is already affected by Covid-19 pandemic.
Cotton Cooperation of India has increased prices today by 200-500 Rs/Candy across all growths of all Zones for 2020-21 season and for 2019-20 season.
ICE cotton futures eased off a three-week high hit in the previous session on Wednesday, pressured by an uptick in the dollar.
Cotton contracts for December fell 0.47 cent, or 0.6% to 84.34 cents per lb by 12:16 pm EDT (1616 GMT). It traded within a range of 84.18 and 85.09 cents a lb.
The dollar was up 0.1% against rival currencies, increasing the cost of greenback denominated cotton for buyers holding other currencies.
“The cotton market has had good demand for a long-time (and) that is supporting the market, so this is just a small delay in what looks like an attempt to break out to the upside,” said Rogers Varner, president of Varner Brokerage in Cleveland.
Market participants were also keeping an eye on weather developments and its impact on the crop in the top cotton producing West Texas region.
“Demand is going to stay good as the world economy reopens but as far as the weather, it’s a roulette wheel- you don’t know what you’re going to get, and therefore the market will keep a premium in the price well into the growing season,” Varner said.
The US Department of Agriculture’s weekly crop progress released on Tuesday showed that 43% of the cotton crop was in good-to-excellent condition by the week ended May 30, on par with 44% this time last year.
Given talk of major acre reductions in the delta and uncertain Texas weather, the cotton market should trade in the 80s through June, Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note dated June 1.
Total futures market volume fell by 25,828 to 16,457 lots. Data showed total open interest gained 3,818 to 230,311 contracts in the previous session.
The Spot Rate remained unchanged at Rs 12300 per maund. The Polyester Fiber was available at Rs 200 per kg.
Copyright Business Recorder, 2021